You love the blog, so subscribe to the Beervana Podcast on iTunes or Soundcloud today!

Tuesday, August 09, 2011

Craft Beer Grows at 15%; 725 New Breweries Planned

The Brewers Association has new numbers out that at this point won't surprise anyone:

Dollar sales were up 15 percent in the first half of 2011, excluding brewers who left the craft segment in 2010². Volume of craft brewed beer sold grew 14 percent for the first six months in 2011, compared to 9 percent growth in the first half of 2010.

(That little footnote points to BA's rules about who can be called a "craft brewer," and it excludes Craft Brewers Alliance, Goose Island, and others. So who knows how much more good beer people are actually buying.) Perhaps more shocking is bit of news:

The U.S. now boasts 1,790 breweries—an increase of 165 additional breweries since June 2010. The Brewers Association also tracks breweries in planning as an indicator of potential new entrants into the craft category, and lists 725 breweries in planning today compared to 389 a year ago.

I stick with analysis I did at the beginning of the year, wherein I argued that the new brewery explosion is a rational market response to sales growth--but yikes, that graph gives me a visceral shock. When you look at the beginning stages of bubbles, that's exactly what they look like. The growth better flatten out soon, or I will become less bullish on the future. I'd hate to see another late-90s style recalibration.

The problem I have with this question is it ignores several obvious facts: most breweries are brewpubs, creating their own markets and customer bases and more resemble restaurants than breweries; Consumers are in charge, as long as they want more unique and individual experiences, someone will try and provide that for them; The market will, ultimately, sort all this out. This does not mean any "bubble" will burst, simply that the better companies will succeed and the others will not; No one seems to ask how many wineries Oregon/California/U.S. can handle, or how many coffee roasters, or cheese makers, or . . . Why is beer so much different, other than its rather unique American history?

Gary, that's why I'm sticking to my "this is what you'd expect to see in a robust market" line.

If there is a downside, it's that some of these new breweries are more interested in cashing in than making quality beer. I agree that the market will sort that out, but the effect on craft beer isn't good--particularly in the more delicate new markets where a lot of these are popping up.

On the other hand, as I said in that other post, Oregon has a brewery density of 1 per 40,000 people. No one thinks we have too many breweries here. If the US had the same per-capita rate, that would be 7,750 breweries. So it's all relative.

At last people have opened their eyes for the variety of craft beer. I have been said that for many years now – it makes sense to support the local breweries and possibly get a better beer than the comercial beers you can find in the supermarket? Or perhaps even brew your own beer, to make a beer that matches your taste exactly…